South Africa’s Policy Uncertainty Index for the fourth quarter is still in negative territory, but positive factors over the past three months have outweighed the negative ones, with the economy entering 2026 on a note of cautious optimism. The NWU Business School’s Policy Uncertainty Index for the fourth quarter showed a welcome easing to 64.9 from its record high of 81.0 in the third quarter. Although still in negative territory, the index calibration suggests the economy may have reached a turning point, Professor Raymond Parsons, economist at the NWU Business School, says.
The Policy Uncertainty Index was launched in early 2016. The role of policy uncertainty has loomed large in much of the recent economic debate in South Africa and has important implications for business confidence and the country’s investment climate, Parsons says. The policy uncertainty is expressed as a net balance, the net outcome of positive and negative factors affecting the calibration of policy uncertainty.
The policy uncertainty index is expressed as a net balance – the index is the net outcome of positive and negative factors influencing the calibration of policy uncertainty over the relevant period. The index has three elements that show the convergence of: Parsons points out that growth prospects for most parts of the world are positive but modest overall. The International Monetary Fund (IMF) projects global growth of 3.2% in 2026, but elevated global uncertainty is now seen as the ‘new normal’, he says.
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“The universal global challenge is how countries can turn uncertainty into opportunity by strengthening resilience, restoring stability and laying the groundwork for durable growth.” The US economy appears to be facing 2026 with a mix of strength and vulnerabilities. Although some slowdown is expected, next year’s growth rate is positive, with growth projected to be close to its potential of 2%. Nonetheless, the US economic picture is not free from risks, including the AI stock market ‘bubble’, according to the index.
The IMF as well as the World Bank have described the Sub-Saharan Africa economy as ‘resilient’with steady real gross domestic product (GDP) growth of over 4% next year, but emphasised the downside risks arising from global trade uncertainty, high external debt and a major jobs deficit. In thethird quarter, the South African economy showed its fourth consecutive increasein economic activity, although it was off a low base. GDP forecasts for 2026 are generally modestly higher, ranging from 1.1% to 1.6% and averaging out at about 1.4%. Overall unemployment, although still unacceptably high, was slightly lower in the third quarter of 2025 than in the second quarter, according to the latest Statistics SA labour survey.
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